Bajaj Auto International Holdings BV is in talks to offload its 48 per cent stake in Austria-based KTM AG to its parent company KTM Industries AG, which is Europe's biggest sport motorcycles producer.
"KTM Industries AG was informed by Pierer Industrie AG and Bajaj that they have started discussions on assessing the possibility of transferring Bajaj's 48 per cent stake in KTM AG to KTM Industries AG, with Austrian industrial investment group Pierer Group continuing to retain the controlling majority over KTM Industries AG," Bajaj Auto informed Indian stock exchanges on Thursday in regulatory filings.
At present, Pierer Industrie holds about 62 per cent of shares in KTM Industries, which holds nearly 51.7 per cent of shares in KTM AG. Bajaj holds the rest 48 per cent of KTM shares.
The talks come after Volkswagen's plan to sell the iconic Ducati brand following the recent diesel-gate scandal. However, following opposition from the labour union, the company cannot go ahead with the sale.
Industry experts say that these issues are expected to be sorted soon and Bajaj could later in 2019 be the owner of Ducati, considered as 'the Ferrari of the motorcycle industry.'
Pierer Industrie plans on making KTM the third largest motorcycle brand worldwide by 2020 after Honda and Yamaha. The company sold 2.7 lakh motorcycles last year, up from 2.4 lakh units in 2017.
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"Pierer Industrie and Bajaj will now evaluate the proposals in detail. The transaction decision is targeted to be made in the second quarter of 2019," said Bajaj Auto.
KTM's concentration on emergent markets like India could ensure better profitability. Bajaj is a dominant player in the country with a vast dealership network.
Experts say the introduction of several homologation rules in the near future will make all manufacturers look to new markets to make a profit.